SOUTH OCEAN HOLDINGS LIMITED - Audited Summary Consolidated Financial Results for the Year Ended 31 December 2018

Release Date: 25/03/2019 17:45
Code(s): SOH
 
Wrap Text
Audited Summary Consolidated Financial Results for the Year Ended 31 December 2018

South Ocean Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2007/002381/06)
Share code: SOH
ISIN: ZAE000092748


AUDITED SUMMARY CONSOLIDATED FINANCIAL RESULTS ANNOUNCEMENT FOR THE YEAR
ENDED 31 DECEMBER 2018 (“FINANCIAL STATEMENTS”)

                                      SALIENT FEATURES
                      Group revenue increased by 16.2% to R2.009 billion.
                                  Loss per share of 1.9 cents.
                            Headline earnings per share of 3.6 cents.
        Tangible net asset value per share decreased by 20.2% to 240.5 cents per share.


SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                  (Audited)              (Audited)
                                                               31 December            31 December
R’000                                       NOTES                     2018                   2017
Assets
Non-current assets                                                 191 650                297 500
Property, plant and equipment                  4                   191 650                293 035
Deferred tax asset                                                       -                  4 465

Current assets                                                     427 545                389 370
Inventories                                                        181 003                162 879
Trade and other receivables                                        230 942                214 971
Cash and cash equivalents                                           15 600                 11 520
Disposal Group held for sale                   7                   239 666                198 024
Total assets                                                       858 861                884 894

Equity and Liabilities
Equity
Share capital                                  5                   461 343                441 645
Reserves                                                             2 063                  1 230
Retained earnings                                                   25 414                 29 078
Total equity                                                       488 820                471 953

Liabilities
Non-current liabilities                                             73 382                 84 648
Interest bearing borrowings                    6                    39 005                 50 294
Share-based payments                                                 8 406                    492
Deferred tax liabilities                                            25 971                 33 862

Current liabilities                                                240 057                250 813
Trade and other payables                                           171 209                195 448
Interest bearing borrowings                    6                    66 490                 55 365
Current tax payable                                                  1 468                      -
Share-based payments                                                   890                      -
Disposal Group held for sale                   7                    56 602                 77 480
Total liabilities                                                  370 041                412 941

Total Equity and Liabilities                                       858 861                884 894

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                            (Audited)                    (Audited)
                                                                     For the year ended
                                                          31 December        Change   31 December
R’000                                            NOTES           2018          %             2017

Continuing operations
Revenue                                                         1 727        21.2%      1 425 777
Cost of sales                                              (1 584 314)                 (1 359 186)
Gross profit                                                  143 478                      66 591
Other operating income                                          6 923                       6 795
Administration expenses                                       (55 183)                    (38 438)
Distribution expenses                                          (2 116)                     (2 532)
Operating expenses                                            (32 114)                    (13 117)
Operating profit                                               60 988                      19 299
Finance income                                                    902                         828
Finance costs                                                 (21 972)                    (23 946)
Profit/(loss) before taxation                                  39 918     1 145.3%         (3 819)
Taxation                                           8          (14 250)                     (2 404)
Profit/(loss) for the year from
continuing operations                                          25 668       512.5%         (6 223)
Loss for the year from discontinuing
operations                                         7          (29 332)       42.6%        (51 127)
Loss for the year                                              (3 664)                    (57 350)
Other comprehensive profit (loss)
Exchange differences on translation of
foreign operations                                                833                        (569)
Total comprehensive loss attributable
to equity holders of the Group                                 (2 831)       95.1%        (57 919)

                                                                Cents                       Cents
                                                            per share                   per share
Loss per share - basic and diluted                               (1.9)       94.8%          (36.7)


SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                   For the year ended
                                                                   (Audited)            (Audited)
                                                                 31 December         31 December
R’000                                                                   2018                2017
Share capital
Opening balance                                                        1 274               1 274
Rights issue                                                             469                   -
Closing balance                                                        1 743               1 274
Share premium
Opening balance                                                      440 371             440 371
Rights issue                                                          19 229                   -
Closing balance                                                      459 600             440 371

Foreign currency translation reserve
Opening balance                                                        1 230               1 799
Exchange differences on translation of foreign
operations                                                               833                (569)
Closing balance                                                        2 063               1 230
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

Retained earnings
Opening balance                                                       29 078              86 428
Total comprehensive loss for the year                                 (3 664)            (57 350)
Closing balance                                                       25 414              29 078


SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

                                                              For the year ended
                                                              (Audited)               (Audited)
                                                           31 December              31 December
R’000                                                             2018                     2017
Cash flows from operating activities
Cash generated from operations                                  46 490                  146 931
Finance income                                                   1 035                      996
Finance costs                                                  (24 551)                 (26 988)
Taxation paid                                                  (15 105)                       -
Net cash from operating activities                               7 869                  120 939


Cash flows used in investing activities
Purchase of property, plant and equipment                       (9 385)                 (6 770)
Proceeds from sale of property, plant and equipment                938                     383
Purchase of intangible assets                                        -                  (1 040)
Net cash used in investing activities                           (8 447)                 (7 427)


Cash flows from/(used in) financing activities
Proceeds from rights offer                                      19 698                       -
Proceeds from interest bearing borrowings                        1 697                  10 699
Repayment of interest bearing borrowings                       (14 462)               (115 703)
Net cash from/(used in) financing activities                     6 933                (105 004)

Total cash and cash equivalents movement for the
year                                                             6 355                   8 508
Cash and cash equivalents at the beginning of the year          11 520                  22 336
Cash and cash equivalents at the beginning of the year
from disposal group                                             18 755                       -
Effect of exchange rate movement on foreign entity
balances                                                           833                    (569)
Total cash and cash equivalents from disposal group
at end of year                                                 (21 863)                (18 755)
Total cash and cash equivalents at end of the year              15 600                  11 520

Total cash and cash equivalents from continuing
operations                                                      15 600                  11 520
Total cash and cash equivalents from discontinuing
operations                                                      21 863                  18 755
                                                                37 463                  30 275

SELECTED NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL INFORMATION


1. General information

   South Ocean Holdings Limited and its subsidiaries (“SOH”) manufacture and distribute electrical
   cables, import and distribute light fittings, lamps, electrical accessories and audio-visual hardware
   and accessories, and hold investments in a light fittings assembly operation and property investment
   company. South Ocean Holdings Limited is a public company listed on the JSE Limited (“JSE”) and is
   incorporated and domiciled in the Republic of South Africa.

   The audited summary consolidated financial information was externally compiled under supervision of
   MK Zack and was approved for issue by the directors on 25 March 2019.


2. Basis of preparation

   The audited summary consolidated Financial Statements of South Ocean Holdings Limited have
   been prepared in accordance with the JSE Listing Requirements for provisional reports and the
   requirements of the Companies Act of South Africa applicable to summary Financial Statements. This
   should be read with the audited Financial Statements for the year ended 31 December 2018 from
   which these results have been extracted. The JSE Listing Requirements require provisional reports to
   be prepared in accordance with the framework concept and the measurement and recognition
   requirements of the International Financial Reporting Standards (“IFRS”) and the SAICA Financial
   Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements
   as issued, by the Financial Reporting Standards Council and to also, as a minimum, contain the
   information required by IAS 34 “Interim Financial Reporting”.

   The directors take full responsibility for the preparation of the provisional report and that the financial
   information has been correctly extracted from the underlying annual financial statements.


3. Accounting policies

   The accounting policies applied in the preparation of the Financial Statements from which the
   Summary Consolidated Financial Statements were derived are in terms of IFRS and are consistent
   with those accounting policies applied in the preparation of the Consolidated Financial Statements
   used in the prior year, except where indicated. In the current year, the Group has applied IFRS 9 and
   15 with an initial date of application of 1 January 2018. The application of these standards has not
   had a material impact on the Group’s results. There are no other new standards or amendments that
   were issued since the last annual report that will result in a material impact in the reported or future
   results of the Group.


4. Property, plant and equipment and intangible assets

   During the year, the Group invested R8.6 million (2017: R7.8 million) in capital expenditure. An
   impairment charge of R8.5 million (2017: R18.7 million impairment reversal) before tax was raised
   against the properties at Anchor Park Investments 48 Proprietary Limited (“Anchor Park”) due to the
   carrying value of the properties being higher than the net realisable value. The details of changes in
   tangible and intangible assets are as follows:
 
                                                                              (Audited)             (Audited)
                                                                               Tangible           Intangible
    R’000                                                                        assets               assets
    Year ended 31 December 2018
    Opening net carrying amount                                                 293 035                    -
    Additions                                                                     8 629                    -
    Disposals                                                                    (1 363)                   -
    Depreciation                                                                (14 169)                   -
    Property classified as held for sale                                        (86 000)                   -
    Impairment of property classified as held for sale                           (8 482)                   -
    Closing net carrying amount                                                 191 650                    -
   
    Property, plant and equipment and intangible assets (continued)


                                                                              (Audited)              (Audited)
                                                                              Tangible             Intangible
    R’000                                                                       assets                 assets
    Year ended 31 December 2017
    Opening net carrying amount                                                289 699                  7 783
    Additions                                                                    6 770                  1 040
    Disposals                                                                     (341)                (1 339)
    Impairment reversed                                                         18 743                      -
    Depreciation / amortisation                                                (15 450)                     -
    Classified as held for sale - impairment                                    (6 386)                (7 484)
    Closing net carrying amount                                                293 035                      -


5. Share capital and share premium

                                                    Number of      Ordinary        Share
                                                       Shares        shares      premium        Total
                                                       issued        (R’000)      (R’000)      (R’000)
   At 1 January 2018
   Opening balance                                156 378 794         1 274      440 371       441 645
   Issue of ordinary shares during the year
   through the exercise of options issued under
   the non-renounceable rights offer               46 898 000           469       19 229        19 698
   Closing balance                                203 276 794         1 743      459 600       461 343



   At 31 December 2017
   Opening and closing balance                    156 378 794         1 274      440 371       441 645


   SOH concluded a Rights Offer to Shareholders recorded in the register at the close of trade on
   Friday, 20 April 2018, to subscribe for Rights Offer Shares on the basis of 29.99000 Rights Offer
   Shares for every 100 SOH shares held on such date at a Rights Offer Price of 42 cents per Rights
   Offer Share. The Rights Offer Price represented a premium of approximately 92.73% to the 30-day
   VWAP share price of SOH of 21.79236 cents per share as at Wednesday, 7 March 2018. The Rights
   Offer was underwritten by Macrovest 147 Proprietary Limited (“Macrovest”). The Group successfully
   raised R19 697 160 cash through the issue of 46 898 000 shares. The proceeds of this Rights Offer
   were applied to reduce borrowings.


6. Interest bearing borrowings

                                                                     (Audited)                (Audited)
                                                                  31 December              31 December
   R’000                                                                 2018                     2017
   Secured loans
   Non-current liabilities                                             39 005                   50 294
   Current liabilities                                                 66 490                   55 365
                                                                      105 495                  105 659

   The movement in borrowings is analysed as follows:

   Opening balance                                                    105 659                  249 037
   Additional loans raised                                              1 697                   10 699
   Finance costs                                                       20 773                    5 851
   Repayments                                                         (22 634)                (121 555)
   Liabilities held for sale                                                -                  (38 373)
   Closing balance                                                    105 495                  105 659

7. Discontinuing operation and Non-current assets held for sale

   In a general meeting held on 29 November 2018, the shareholders approved the disposal by SOH of
   100% of the issued share capital in and claims against Radiant Group and the disposal of the
   properties from which Radiant Group operates, to Eurolux Proprietary Limited. The effective date of
   the disposal and loss of control was 1 January 2019. The selling price of Radiant Group is R96.8
   million, of which R77.0 million was received on 18 January 2019 with the balance of R19.8 million to
   be received by 31 March 2019. The properties will be derecognised on date of transfer, which is
   expected to take place by June 2019. The properties were sold for R86 million.

   The disposal group consists of the assets and liabilities of Radiant Group, as well as the properties
   from which Radiant Group operates and which are owned by Anchor Park. These are classified as
   held for sale in terms of IFRS 5 in the Annual Financial Statements and are set out below:

                                                                        (Audited)            (Audited)
                                                                     31 December          31 December
    R’000                                                                   2018                 2017
    Assets and Liabilities
    Assets of disposal Group
    Property, plant and equipment                                          86 000                   -
    Inventories                                                           100 928             136 227
    Trade and other receivables                                            30 853              43 042
    Derivative financial instrument                                            22                   -
    Cash and cash equivalents                                              21 863              18 755
                                                                          239 666             198 024

    Liabilities of disposal Group
    Interest bearing borrowings                                            25 773              38 374
    Derivative financial instrument                                             -               4 348
    Trade and other payables                                               30 829              34 758
                                                                           56 602              77 480


                                                                         (Audited)           (Audited)
                                                                      31 December         31 December
    R’000                                                                    2018                2017

    Financial performance of discontinuing operations
    Revenue                                                               281 076             303 017
    Cost of sales                                                        (198 458)           (229 666)
    Gross profit                                                           82 618              73 351
    Other operating income                                                  6 421                 644
    Total expenses                                                       (103 224)           (100 198)
    Impairment of non-current assets                                      (13 804)             (8 295)
    Operating loss                                                        (27 989)            (34 498)
    Finance income                                                            133                 167
    Finance expenses                                                       (2 579)             (3 042)
    Loss before taxation                                                  (30 435)            (37 373)
    Taxation                                                                1 103             (13 754)
    Loss for the year                                                     (29 332)            (51 127)

    Cash flow information
    Net cash inflow from operating activities                               4 295              40 566
    Net cash inflow/(outflow) from investing activities                    10 753              (1 139)
    Net cash outflow from financing activities                                (90)            (18 194)
    Net increase in cash generated by disposal group                       14 958              21 233

8. Taxation

   The effective tax rate is 35.7% (2017: 62.9%) which is greater than the corporate tax rate of 28% due
   to legal and professional fees in respect of disposal and rights issue which are not tax deductible.


9. Reconciliation of headline earnings/(loss)

                                                                       (Audited)          (Audited)
                                                                    31 December        31 December
   R’000                                                                   2018               2017

   Loss attributable to equity holders of the Group                      (3 664)           (57 350)
   Adjustment for:
   Loss/(profit) on disposal of property, plant and                         440                (30)
   equipment
   Net impairment of non-current assets                                   9 938              1 187
   Headline earnings/(loss)                                               6 714            (56 193)


   Headline earnings/(loss) per share (cents)                               3.6              (35.9)


10. Weighted average number of shares

                                                                        (Audited)         (Audited)
                                                                     31 December       31 December
                                                                            2018              2017

    Number of shares in issue                                        203 276 794       156 378 794

    Weighted average number of shares in issue at beginning of
    the year                                                         156 378 794       156 378 794

    Weighted average number of shares in issue at end of the
    year                                                             187 858 273       156 378 794


11. Net asset value

                                                                        (Audited)          (Audited)
                                                                     31 December        31 December
                                                                            2018               2017

    Net asset value per share (cents)                                      240.5              301.8

    Tangible net asset value per share (cents)                             240.5              301.8


12. Final dividend declaration

    No final dividend has been declared.


13. Audit opinion

    These summary Consolidated Financial Statements for the year ended 31 December 2018 have
    been audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The
    auditor also expressed an unmodified opinion on the Financial Statements from which these
    summary Consolidated Financial Statements were derived.

    A copy of the auditor’s report on the summary Consolidated Financial Statements and of the auditor’s
    report on the Consolidated Audited Financial Statements are available for inspection at the
    Company’s registered office, together with the Audited Financial Statements identified in the
    respective auditor’s reports.


14. Segment reporting

    The chief operating decision-maker reviews the Group’s internal reporting in order to assess
    performance and has determined the operating segments based on these reports.

    The business performance of the operating segments: electrical cables manufacturing, lighting and
    electrical accessories, and property investments, is evaluated from the market and product
    performance perspective.

    The segment information has been prepared in accordance with IFRS 8 – ‘Operating Segments’,
    which defines the requirements for the disclosure of financial information of an entity’s segments.

    The standard requires segmentation on the Group’s internal organisation and reporting of revenue
    and adjusted EBITDA based upon internal accounting presentation.

    The segment revenue and adjusted EBITDA generated by the Group’s reportable segments are
    summarised as follows:

                                                        Adjusted          Segment         Segment
  R’000                                  Revenue           EBITDA          assets        liabilities
  Year ended
  31 December 2018
  Electrical cable manufacturing       1 728 365           85 878          517 806           230 127
  Lighting     and      electrical       290 111          (12 604)         153 667            56 602
  accessories      (discontinued
  operations)
  Property investments                    23 767           17 257          179 761            44 030
                                       2 042 243           90 531          851 234           330 759
  31 December 2017
  Electrical cable manufacturing       1 427 627           29 267          487 432           243 748
  Lighting and electrical                304 977          (34 325)         198 024            77 480
  accessories (discontinuing
  operations)
  Property investments                    22 794           17 924          189 800            50 208
                                       1 755 398           12 866          875 256           371 436



 Reconciliation of total segment report to the statement of financial position and statement of
 comprehensive income is provided as follows:

                                                                        (Audited)         (Audited)
                                                                     31 December       31 December
  R’000                                                                     2018              2017
  Revenue
  Reportable segment revenue                                           2 042 243         1 755 398
  Inter-segment revenue (property rentals)                               (21 385)          (20 784)
  Inter-segment revenue – other                                          (11 990)           (5 820)
  Discontinuing operations                                              (281 076)         (303 017)
  Revenue per consolidated statement of
  comprehensive income                                                 1 727 792         1 425 777
   Segment reporting (continued)

                                                                     (Audited)          (Audited)
                                                                  31 December        31 December
  R’000                                                                  2018               2017

  Profit/(loss) before tax
  Adjusted EBITDA                                                      90 531             12 866
  Corporate and other overheads                                       (25 590)           (16 152)
  Depreciation                                                        (15 524)           (15 450)
  Impairment of intangible assets - lighting and electrical
  accessories segment                                                  (2 015)            (5 573)
  Reversal impairments of plant and machinery – electrical
  cable manufacturing segment                                               -             18 743
  Amortisation of intangible assets – lighting and electrical            (218)            (1 339)
  accessories segment
  Impairment of non-current assets – lighting and electrical                -             (8 294)
  accessories segment
  Impairment of current assets – lighting and electrical               (5 450)                 -
  accessories segment
  Impairment of non-current assets – property investments              (8 482)                 -
  segment
  Impairment of investment in subsidiaries                               (253)
  Discontinuing operations                                             27 989             34 498
  Operating profit per consolidated statement of                       60 988             19 299
  comprehensive income
  Finance income                                                        1 035                995
  Finance costs                                                       (24 551)           (26 988)
  Discontinuing operations                                              2 446              2 875
  Profit/(loss) before tax per consolidated statement of
  comprehensive Income                                                 39 918             (3 819)

  Assets
  Reportable segment assets                                           851 234            875 256
  Corporate and other assets                                            7 627              5 173
  Deferred tax                                                              -              4 465
  Total assets per statement of financial position                    858 861            884 894

  Liabilities
  Reportable segment liabilities                                     330 759             371 436
  Corporate and other liabilities                                     11 843               7 643
  Taxation payable                                                     1 468                   -
  Deferred tax                                                        25 971              33 862
  Total liabilities per statement of financial position              370 041             412 941


15. Related party transactions

    There were no related party transactions during the period ended 31 December 2018, save for
    various intercompany transactions in the ordinary course of business.


16. Director changes

    Ms MK Lehloenya who was the Chief Financial Officer resigned as director on 31 January 2018. Mr B
    Petersen was appointed as Non-Executive Director on 11 June 2018. Mr MK Zack was appointed as
    Chief Financial Officer on 7 August 2018.

17. Subsequent events

    In a general meeting held on 29 November 2018, the shareholders approved the disposal by SOH of
    100% of the issued share capital in and claims against Radiant Group and the disposal of the
    properties from which Radiant Group operates, to Eurolux Proprietary Limited. The effective date of
    the disposal and loss of control was 1 January 2019. The selling price of Radiant Group is R96.8
    million, of which R77.0 million was received on 18 January 2019 with the balance of R19.8 million to
    be received by 31 March 2019. The properties will be derecognised on date of transfer, which is
    expected to take place by June 2019. The propertIes were sold for R86 million.

    The disposal group consists of the assets and liabilities of Radiant Group, as well as the properties
    from which Radiant Group operates and which are owned by Anchor Park. These are classified as
    held for sale in terms of IFRS 5 in the Annual Financial Statements. Refer to note 7.

    Notwithstanding the above, the directors are not aware of any other significant events arising since
    the end of the financial year, which would materially affect the operations of the Group or its operating
    segments.

18. Going concern

    The Annual Financial Statements have been prepared on the basis of accounting policies applicable
    to a going concern. This basis presumes that funds will be available to finance future operations and
    that the realisation of assets and settlement of liabilities, contingent obligations and commitments will
    occur in the ordinary course of business.

    The Group had short-term borrowings to the value of R92.3 million (2017: R81.2 million) as disclosed
    in notes 11 and 13 of the Annual Financial Statements. South Ocean Electric Wire Company
    Proprietary Limited (“SOEW”) has an overdraft facility with First National Bank of R214.3 million
    (2017: R214.3 million). The facility is due for review during March 2019.

    The directors perform a property valuation every three years with the previous valuation having been
    performed at the end of 2017. The market valuation of the properties was in excess of the carrying
    value by R3.5 million at the time. The properties are stated at historical cost less accumulated
    depreciation and impairment losses, in line with the Group’s accounting policy.

COMMENTARY


Introduction
The Board of South Ocean Holdings Limited announced its summary consolidated results for the year
ended 31 December 2018 (“the year”).

South Ocean Holdings Limited is an investment holding company, comprising four operating
subsidiaries namely: South Ocean Electric Wire Company Proprietary Limited (“SOEW’), a
manufacturer of low voltage electrical cables, Radiant Group Proprietary Limited (‘Radiant Group”),
an importer and distributor of light fittings, lamps, electrical accessories and audio visual hardware
and accessories, Anchor Park Investments 48 Proprietary Limited (“Anchor Park”), a property holding
company, and Icembu Services Proprietary Limited (“Icembu”), a light fittings assembly company.


Financial overview

The results as per the Statement of Comprehensive Income is split between continuing operations
and discontinuing operations. The loss for the year for the Group is R3.7 million compared to the loss
of R57.4 million for the 2017 financial year. The segment results are discussed below.


Segment results

Electrical cable manufacturing – SOEW
Revenue increased by 21.1% (2017: 0.7%, decreased) to R1.728 billion (2017: R1.426 billion). The
increase in SOEW revenue was mainly attributable to reduced market supply enabling increased
volumes and improved pricing.

The volatility in the Rand Copper Price (“RCP”) again negatively impacted on gross profit margins as
customers placed orders depending on the movement of the RCP price which resulted in lower
margins.

Working capital increased during the year from R189.4 million in 2017 to the current working capital
of R235.6 million due to the timing of certain supplier payments over year-end. The overdraft balance
increased from R42.9 million to R53.9 million.

Management continues to focus on improving efficiencies in the factory and cost containment to
ensure that the company will remain profitable.


Lighting and electrical accessories – Radiant Group
Radiant Group reported revenues of R285.5 million (2017: R304.9 million) which is a decrease of
6.4% (2017: 11.6%, decrease) when compared to the prior year.

Radiant Group’s turnaround strategy has seen the company make progress in managing working
capital. The tough economic conditions and stiff competition has hindered the implementation of the
turnaround strategy. Inventory management has seen reduction in stock holding by R29.8 million, the
clearance of excess and slow-moving stock affected margins significantly. The stock provision has
increased to R27.8 million as provision was made for all slow-moving stock.

Cash management has improved significantly as interest expense has decreased by R1.8 million or
38.5% for the year if compared to the previous year.

The Radiant Group was sold on 1 January 2019 for R96.8 million.

Property investment – Anchor Park
Anchor Park’s revenue is derived mainly from Group companies, as it leases its properties to fellow
subsidiaries. The increase in revenue of 4.3% in rental income was due to increased rental premiums
and from renting out additional space to third parties.
The properties from which the Radiant Group operates and which are owned by Anchor Park were
sold as part of the Radiant Group transaction on 1 January 2019. Transfer of ownership is expected
to take place during the first half of 2019.

Seasonality
The Group’s earnings are affected by seasonality as earnings for the second half of the year are
historically higher than the first six months. Management expects the traditional seasonality trend to
continue in future.

Prospects
The Group’s focus for the year is to improve profitability and the first step was to finalise the sale of
Radiant Group and the sale of the properties occupied by Radiant Group.

The cash generated from the sale will be utilised to reduce the overdraft facility and spent on capex to
increase SOEW’s production capacity.

The Group increased its BEE shareholding and is working on increasing the BEE shareholding to at
least 25%, which will create opportunities in increasing revenue as new markets can be targeted. The
drivers for growth are global and local economic growth, increasing customer base, improving BEE
shareholding and improvement in efficiencies.

Management is confident that the above actions will improve the Group’s profitability.

Appreciation
The directors would like to express their appreciation towards the management and staff as well as all
our valued customers, suppliers, advisors, business partners, stakeholders and shareholders for their
continued support.

Forward looking information included in this announcement has not been reviewed and reported on
by the Group’s independent auditors.

On behalf of the board
25 March 2019

KH Pon CA(SA)                                                                        JP Bekker CA(SA)
Chairman                                                                         Chief Executive Officer


Directors: K H Pon# (Chairman), H L Li# Q Deputy-Vice Chairman), J P Bekker*(Chief Executive
Officer), M K Zack*(Chief Financial Officer), N Lalla#, D J C Pan@A, B Petersen?, C Y Wu?Q ,
* Executive # Independent Non-Executive ? Non-Executive Q Taiwanese @ Brazilian AAlternate

Registered Office: 12 Botha Street, Alrode, 1451 (PO Box 123738, Alrode, 1451)
Company Secretary: WT Green, 21 West Street, Houghton, 2198 (PO Box 123738, Alrode, 1451)
Sponsor: Arbor Capital Sponsors Proprietary Limited, 20 Stirrup Lane, Woodmead Office Park,
corner Woodmead Drive and Van Reenens Avenue, Woodmead, 2191 (Suite #439, Private Bag X29,
Gallo Manor, 2052)
Share Transfer Secretary: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Ground
Floor, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107, South Africa), Telephone: +27(11)
370 5000, Telefax: +27(11) 688 5200, Website: www.computershare.com
Auditors: PricewaterhouseCoopers Inc. 4 Lisbon Lane, Waterfall City, Jukskeiview, Johannesburg,
2090. Telephone: +27(12) 797 4000 Telefax +27(12) 797 5800, Website: www.pwc.co.za

Date: 25/03/2019 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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